Coinbase is here: a digital currency exchange goes public at $100bn valuation

Company's stock rose to $381 in a debut that captured market interest in cryptocurrency

Coinbase is going public at a time when chatter about cryptocurrencies is everywhere, even at the US Federal Reserve. AP

Coinbase made a rousing debut on Wall Street on Wednesday, with the digital currency exchange’s stock opening at $381, giving it a market value of $100 billion.

The company’s listing on a public stock exchange is seen by some as an inflection point for digital currencies.

Coinbase’s fortunes are seen as closely tied to Bitcoin, the most-popular cryptocurrency. Bitcoin has topped $63,000, up from $29,000 at the start of the year, and Coinbase said recently that its first-quarter revenue should total around $1.8 billion, exceeding its revenue for all of 2020.

Coinbase is making its initial public offering of stock with cryptocurrency chatter seemingly everywhere, even at the US Federal Reserve. It is being incorporated into business plans and accepted by major corporations like Tesla, PayPal and Visa.

“The Coinbase IPO is potentially a watershed event for the crypto industry and will be something the Street will be laser focused on to gauge investor appetite,’” said Daniel Ives, an analyst at wealth management firm Wedbush.

The stock opened at $381 per share, up 52.4 per cent from a reference price of $250 per share set on Tuesday.

It also surged as high as $429 in the early hours but came back down to its debut price.

There were 43 million verified Coinbase users in 2020, with 2.8 million making transactions monthly. Its revenue more than doubled to $1.14 billion last year and the company swung to a profit of $322.3 million after losing tens of millions in 2019.

When Coinbase filed papers with US regulators in February to go public, it said it would do so through a direct listing, which allows insiders and early investors to convert their stakes in the company into publicly traded stock.

Shares of Coinbase, which will be traded on the Nasdaq under the ticker "COIN", will attract investors who want to get into the cryptocurrency space in addition to, or without buying any coins at all, said Lule Demmissie, president of Ally Invest.

“It could also be a less volatile security than the coins themselves.”

Some Wall Street analysts project that Coinbase Global Inc could be valued at $100bn, based on private transactions of its shares. This week, Nasdaq gave the company a $250 reference price.

That would make it one of the top 100 biggest publicly traded US companies that will be far larger than the New York Stock Exchange or Nasdaq.

The Coinbase hype went into overdrive last week when the company reported estimates of its first-quarter results, including about $1.8bn in revenue and net income between $730m and $800m.

Still, not everyone is convinced. David Trainer, chief executive of investment research firm New Constructs, said Coinbase has “little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high valuation".

Mr Trainer last week put a valuation on Coinbase closer to $18.9bn, arguing it will face more competition as the cryptocurrency market matures.

However, Mr Ives sees Coinbase as a window into the future.

“Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of Bitcoin and crypto for the coming years,” he said.